West Midlands records highest drop in employment in UK as jobless rate rises to highest level in nearly four years

Government figures out today (Tuesday, June 10) show the unemployment rate in the West Midlands region has risen by 1.5 per cent, meaning that just over 5 per cent of people in the region are now out of work (5.2 per cent).

Nationally, the jobless rate increased to 4.6 per cent in the three months to the end of April, up from 4.5 per cent on the previous three-month period, recording the highest level since 2021, while annual growth in regular wages also slowed to a below-forecast 5.2 per cent.

The UK claimant count for May 2025 also increased on the month and the year to 1.74 million.

The figures published by the Office for National Statistics will come as a blow to Chancellor Rachel Reeves ahead of a spending review due to be announced this week, as tax increases introduced in April added to a wider slowdown in the employment market. 

The numbers are the first to be published since a rise in employer national insurance contributions in April designed to raise around £25 billion for Government coffers, affecting almost 1m businesses - as well as a 6.7 per cent rise in the national living wage.

More detailed statistics, showing a more detailed breakdown by individual local authority areas, are due out next month.

Economists say a drop in the number of vacancies in the UK jobs market, which fell by 63,000 in the quarter, showed employers were holding back from recruiting new workers or replacing people when they move on due to the extra cost of employing workers since the turn of the financial year.

Results from a Shropshire Chamber of Commerce poll released in March ahead of the increases highlighted business' fears on tax rises, employment rules, rising inflation, and the aftermath of the November budget. The Chamber said Shropshire firms were on the brink of a "challenging year" ahead and were trading under a "black cloud" of uncertainty as a result of the Chancellor's autumn statement.

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Commenting today Ruth Ross, Shropshire Chamber of Commerce chief executive, said the figures showed that rising in employer national insurance contributions and national living wage was starting to affect employers locally. 

"The increase in employment costs for business appears to be starting to bite with today’s data showing a rise in unemployment," she said.

"This year’s steep increases in national insurance and the national living wage have undoubtedly delivered a shock to businesses."

The highest employment rate in the UK was recorded in the South West at 80.0 per cent, while the lowest was recorded in the North East at 68.2 per cent. 

The highest unemployment rate was in London (6.4 per cent) and the lowest was in Northern Ireland (1.8 per cent), while the highest economic inactivity rate was in the North East (28.1 per cent) and the lowest was in the South West (17.2 per cent), in February to April 2025. 

The Office for National Statistics warned that the statistics were subject to an "increased amount of volatility" due to improvements in data collection for its widely-criticised Labour Force Survey (LFS) estimates.

The news comes as the Bank of England ponders a cut in interest rates ahead of an announcement due next week, with bank bosses monitoring the jobs market for signs of weaker conditions. 

The Bank of England is widely expected to keep rates on hold as it keeps an eye on the impact of volatile trading conditions as a result of US President Donald Trump's tariff-based trade war.

Responding to the latest labour market data Emily Stubbs, head of policy at Greater Birmingham Chambers of Commerce, said the figures highlighted "stark differences" between labour market trends regionally and nationally.

“While the ONS caveat that an increased amount of volatility remains in this dataset, above average and rising unemployment, a potentially significant decline in employment and still-rising economic inactivity in the West Midlands paint a concerning picture," she said.

“Surveying by the ONS also reflects warnings which the British Chambers of Commerce and others raised months ago about increases in the cost of employment.

“Amid mounting cost pressures elsewhere, changes to employer national insurance contributions have forced businesses to cut back on recruitment plans, and in some cases left firms unable to replace workers who have left.

“This week's Comprehensive Spending Review presents a critical opportunity for the Government to take action and meaningfully invest in the health and skills systems, reducing barriers to work and ensuring that people have the necessary skills to access meaningful employment.

“Saddling businesses with further costs by enacting the proposed employment rights bill in its current guise will only pose an additional threat to business investment, stifling employment opportunities. We also implore the Government to make further amendments to this legislation in light of feedback from the business community."